Under the EU plans, electric cars must meet strict local requirements to qualify for subsidies. Rules will state that at least 70% of components need to be manufactured in the EU to qualify for subsidies. The idea was introduced to stop the threat of cheap competition from China which is proving a serious threat to Western brands.

Mike Hawes, SMMT Chief Executive, explained, “The UK automotive sector is gravely concerned by today’s ‘Made in Europe’ proposals set out in the European Commission’s Industrial Accelerator Act. As drafted, it would discriminate against UK-made vehicles and components, damaging a trading relationship worth almost £70 billion annually.

“It is a position that the UK industry and government sought to avoid, given we are both each other’s largest customers and suppliers. However, the strict EU assembly rules and EU27 eligibility criteria currently proposed would effectively put UK manufacturers at a systemic competitive disadvantage in the EU market, a situation which may also be in breach of the EU-UK Trade Cooperation Agreement – the Brexit deal.”

“We will consider union-origin products that are manufactured in third countries with which we have an international commitment.”

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It is understood that the European Commission has proposed extending the rule to cover some products coming in from certain trading partners. This could see the UK included in the scheme in a boost to UK industry but would likely exclude China and the US.

According to Fleet News, Germany wants to open the ‘Made in Europe’ scheme to cover other areas, although France is said to have adopted a more protectionist stance.

Mike appeared to back a closer working relationship with the EU, adding: “The UK government and European counterparts must work together urgently to resolve the situation, extending full, trusted partner status to the UK automotive sector.

“This is not just to ensure choice for British and European consumers – especially in zero emission vehicles – but to deliver the economic growth and security everyone craves.”